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Powershelf Adopts RFID With One-Penny Tag

The smart-shelf technology, from Compass Marketing, now features RFID readers built into the shelf labels and low-cost tags, proprietary to the system, with about a 3-foot read range.
By Claire Swedberg

Without technology-based solutions, the company explains, knowing what products are on the shelf is a challenge for any retailer, but perhaps more so for grocery stores. Products sell quickly based on the flow of customers, the time of day and other factors. Out-of-stocks can be difficult to detect among the large number of products. In fact, professional services firm Ernst & Young says 8 percent of products in such stores are typically out of stock at any given time.

Of that 8 percent, says Anand Raghuraman, who leads Ernst & Young's consumer products and retail strategy practice, half choose to buy a different brand. The other half, meanwhile, simply do not purchase the product and presumably go to another store.

For brands like King's Hawaiian, which makes sweet rolls and other Hawaiian-based food items, "The key issue is understanding out-of-stocks," says John Linehan, King Hawaiian's president and chief strategy and planning officer. "We know we have a lot of them, but Powershelf gives us data around how often, how long and when." With a better understanding of the circumstances around each out-of-stock event, the company and the retailers selling its products can better resolve those issues.

With RFID, however, the smart-shelf system can collect the data even more precisely. "This could be a very significant technological advance for the industry," Linehan states.

Historically, the placement of RFID tags on products such as groceries has been unfeasible due to tag cost. Tags priced between 5 and 10 cents apiece simply are too expensive when it comes to placing them on products valued only at a few dollars, White says. In addition, the installation of fixed RFID readers on ceilings or at portals can be costly. Using handheld readers for periodic stock checking is often labor-intensive, he adds, and does not provide real-time data.

However, White says, when the price of tags drops to a cent, that same application becomes much more affordable. Additionally, with the reader built into the shelving, the installation provides multiple features, including electronic price labels, beacon-based data for consumers, and the inventory counts.

The software provides a dashboard which store management onsite, or at a remote location, can view in order to understand stock shelf status in real time. With such data, companies can drill down to how quickly certain products are selling, as well as how quickly they are being replenished on shelves.

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